Software Investment Trends for 2011

In case you hadn’t figured it out, I’m a software guy. Don’t get me wrong; I like checking out the latest and greatest digital printers and I’ve had the privilege to run various types of presses to give me a true perspective on end-to-end print workflow. Nonetheless, these days you really can’t afford to have one without the other, as software is a key enabler across all print operation types. Whether you’re trying to integrate and automate disparate components of your workflow or making a foray into marketing services, software is critical to accomplishing a wide variety of tasks.

In late 2009, our software group and InfoTrends started an annual research initiative that looks at software investment trends in the printing industry. It was probably a bad year to start, considering how rough 2009 turned out to be. Still, it set a baseline for us to see what types of investments print service providers are making in software. The research helps vendors with their software development road maps, and gives printers a sense of where the industry is headed with the software they are leveraging.

In November 2010, we launched our new survey, and we are just wrapping up compiling the results. I wanted to share a few highlights from these results as we get ready to publish the study to our clients (if you are interested in buying the full report, please drop me an e-mail).

We attempt to survey around 200 printers each year with similar distributions in company size and operation type year-over-year (in 2010, we ended up with 196 qualified respondents). I should note that we focus on the Graphic Arts market with this research, so these results will be most relevant to that constituency.

General Revenue Outlook: Revenue affects a business’ ability to not only invest in new software, but to maintain existing solutions through upgrades and support. 2010 shaped up to be a much better year than 2009 for print businesses. 54% of respondents indicated an increase in revenue for 2010, versus only 18% in 2009. Growth was modest, with most respondents indicating single-digit increases.

Service Mix: The types of services print businesses currently offer and plan to offer in the future can help point to where software will be needed to support those endeavors. Interest in offering both B2B and B2C online storefronts for print ordering continues to grow. Additionally, the transition from print service provider to “marketing service provider” is truly afoot. There was an overall increase in printers offering print and non-print marketing services from 2009 to 2010. Printers plan to continue diversify the mix of services they offer to clients.

Software Ownership: From 2009 to 2010, the software segments that showed significant increases in ownership include variable data publishing, Web-to-Print, Digital Asset Management, and multi-channel/cross-media marketing. This increase parallels areas of growth in our production software forecast, and also strengthens the point about service diversification. In addition, there was a significant increase in future investment consideration for print-centric Management Information Systems (MIS), which may signal an increased focus by printers on operational efficiency and effectiveness going into 2011.

Software-as-a-Service: There has been a lot of hype in the software world at large about the cloud and subscribing to software via a Software-as-a-Service (SaaS) model. Has this hype actually materialized into adoption? According to our survey results, it has. 31% of respondents indicated that they currently use software through a SaaS model, and another 25% are considering utilizing SaaS in the next 12 months. That is significant adoption, which we expect to grow as printers attempt to quicken their time-to-market and scale instantaneously as their needs change.

All-in-all, printers expect to have modest increases in their software investment spend as they shift from survival mode to growth mode. This growth will largely be driven by expansion of core services, as well as the need to streamline production processes to remain competitive.

Obviously, choosing a specific software product and making the investment is only the beginning. Implementation, training, and a whole host of other activities are required to successfully leverage software and ultimately get a return on your investment. What type of software investment is your company looking at for 2011, and how will you utilize that software to meet your goals?

2 Responses to “Software Investment Trends for 2011”

Our perspective, gained through speaking with our customers, prospects, and partners, echos your observations. I would add that there are two other solution areas that are of great interest in the market — process automation and data analytics. Automation enables companies to gain additional ROI through removing costs from their production/delivery processes. Data analytics solutions are viewed as the means to improve segmentation and personalized marketing messaging, resulting in higher response rates/conversion rates, i.e., better ROI on marketing spend.

We believe that there is “pent up” demand worldwide for new and better software solutions. At GMC, we have seen that if a truly compelling business case can be made for a software acquisition — whether it is license based or SaaS based — companies will make the necessary investment. The level of scrutiny for all projects is very high, naturally, and the continued tightness regarding credit/financing options certainly constrain opportunities for companies who want to invest in new technology.

Scott, thanks very much for providing your perspective. I totally agree with your sentiment about process automation and data analytics. This year was the first year we specifically asked about ownership of data analytics technology. While overall adoption was relatively low, there was significant interest in acquiring data analytics software over the next 12 months as service providers look to take their data processing capabilities to the next level.

Financing is definitely still a challenge. Just as you say, making a compelling business case, especially with a clear return on investment, will go a long a way to help justify software investment. Companies that develop clear objectives when investing in software give vendors the opportunity to showcase how they can meet those needs and add value. Again, appreciate your feedback!